Last week, Secretary Geithner tried to calm Congress by telling Democrats that he expected an announcement within the next couple of weeks on an agreement with FHFA. What the agreement was on was left unsaid, but many read it as meaning a deal is in the works on principal forgiveness. We didn’t read the comments that way at the time (see our analyses last week). Now, FHFA Director DeMarco has come out from behind his desk, waging open warfare with Treasury in Sunday’s New York Times and today’s Financial Times. Conclusion: FHFA is having none of it on principal forgiveness and may even be joining investors seeking to block the pending big-bank settlement.

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